Friendlier look is part of Microsoft's plan to infiltrate your living room

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Before you go anywhere in the New Xbox Experience, you'll need to create an avatar that represents you. Put on shades, rock a faux-hawk and sport that Fu Manchu beard you wouldn't be caught dead with in real life.

Will “Halo 3” players want to make cute little avatars on their Xbox 360s?

Well, guess what? They’ll have to. It’s the first thing you’re prompted to do in the New Xbox Experience, the shiny makeover to the Xbox interface that rolled out on Wednesday.

The NXE, as it’s called, is an update to the front-end of the Xbox Live online system, which is, without question, the industry standard.

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Since its inception three years ago, the Xbox Live Marketplace — the storefront for the system — has grown far beyond Microsoft’s expectations. And the Xbox Live interface, called the “blade" system, became ill-equipped to handle the deluge of downloadable games, demos, trailers and movies that came to populate it.

Marc Whitten, general manager for Xbox Live, says they anticipated maybe 200 items in their online store when it launched. “But where we ended up, we have over 20,000, and we’ve had over 500 million downloads inside of our marketplace since we launched the 360,” he says. And from watching that growth, he says it became clear how to change it.

And change it they did. The revamp makes the Xbox 360 a whole lot friendlier, no doubt about it. Games (and movies and TV shows) are represented by their box covers, à la iTunes. And titles are no longer represented by a vertical, text-only list (which could get pretty lengthy in the old blade system), but spread out like a deck of cards across the screen.

Yeah, I know avatars are soooo 2006. And these suckers, with their big heads and big eyes, look a lot like the Miis you create on the Nintendo Wii. “Even the noises sound like Nintendo,” my husband remarked as I crafted a nose, a chin and a hairstyle for my mini-me.

OK, so maybe you’re not into the avatars. But if you’re already a fan of Xbox Live, you’ll find this new interface makes it a lot easier to browse for game content. And finding your online friends is no longer a slog through an endless list — it’s a toggle through a lineup of avatars. And Microsoft hasn’t touched the functionality of Live — online multiplayer, matchmaking and messaging are still intact.

The movie marriage lets Xbox members who have a Gold-level subscription to Xbox Live stream movies from the comfort of their living rooms. You have to be a Netflix subscriber, too, and the unlimited-streaming option begins at $8.99 per month.

It’s worth noting that users will not be able to stream every film or TV show from Netflix’s 100,000-title catalog. Netflix spokesman Steve Swasey said that Xbox 360 owners will have to settle for a “smaller catalog of 12,000 movie and TV episodes,” including those from Starz, the Disney Channel, NBC and CBS.

But not, it seems, Columbia Pictures, which is owned by Sony. Game blogs reported Wednesday that content distributed by Columbia was listed as “currently unavailable for playback on the Xbox.” When asked specifically about whether or not movies from Sony were available, Swasey would only say, “We don’t like to name names.”

The war between Sony and Microsoft goes beyond streaming movies, though. In September, Microsoft dropped the price of its bare-bones Xbox 360 to $199, less than both the Nintendo Wii and the PlayStation 3. And that price reduction is paying off. According to NPD sales data, unit sales increased 33 percent on a weekly sales basis from September to October.

By contrast, the base-level PlayStation 3, which has a $400 price tag, sports an internal Blu-ray DVD player, an 80 gigabyte hard drive — and a free online gaming service. “Gaming for free should be a basic tenet, like your First Amendment rights,” says Susan Panico, director of the PlayStation Network. “It’s crazy to charge people for something like that.”

As a result, she says, the PlayStation Network has 14 million registered accounts globally — 6.5 million of which are in North America. Microsoft also has 14 million active subscribers to Xbox Live — interesting when you consider that the company has sold significantly more 360s than Sony has PS3s.

Sony hopes that its long-delayed online gamer hangout, “Home,” will help bolster the console’s reputation as the high-quality console choice. The service — also free — has gamers create an avatar (yep, those again) and decorate a personal space of their own.

It’s also a place where gamers are meant to meet up with like-minded gamer folks, make new friends and connect with existing ones. It looks like a much higher-resolution Second Life than the NXE, which has a more cartoony style.

“We’ve gone with this realistic look that we think better suits the PlayStation 3 community, but also better suits this idea that I’m going to have virtual goods that I’m going to be proud to call my own,” says Jack Buser, project director of “Home.” “I’m going to rock those shoes, just like I do in real life."

Speaking of spiffed-up avatars, gamer reaction to Microsoft’s New Xbox Experience has been mostly positive so far. “I just downloaded it, and it’s awesome,” read one post on Kotaku, a game enthusiast site.

But further down, a forum poster called CSat420 wrote: “The avatars suck. I couldn’t find anything remotely resembling my hair, so I decided to just make a hot chick instead.”